Poor Man Survival
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A Digest of Urban
Survival Resources
Corporate
Debt Will Prove Damaging to our Economy
So many
financial crisis’ to worry about-what do we do? Answers below!
Right now the entire nation is buzzing about the very first
debates for Democratic presidential contenders in 2019, and much of the focus
of those debates will be on the economy. A total of 20 candidates will
participate in those debates, and the vast majority of them don’t have a prayer
of actually winning the nomination. Of course all of them will have
“plans” for “fixing” the economy, but the truth is that most of those plans
really aren’t that radically different from what has been tried in the past.
No matter who has been in the White House, our insatiable appetite for debt
[both government and private] has allowed us to enjoy a tremendously bloated
standard of living that was far beyond what we actually deserved.
It seems to me those Dems running for
president all want to erode more of our rights, increase taxes to crazy levels
to pay for their pie-in-the-sky programs and grow government to huge levels-We
already have too much government at every level interfering with our lives and
stealing from our pocketbook.
The reality of the matter is that we are at the very end of
the greatest debt bubble in the history of the world, and the way we live is
about to dramatically change no matter who we send to Washington.
By nature of our sick economic system, it’s (rightly)
assumed by many “in the know” that not only are we headed for another financial
crisis…
But that such crushing, debilitating, and
panic-inducing events are all but inevitable.
(Even people who don’t understand how the economy
works get a sense it’s doomed.)
“Most people imagine that if they borrow from a bank,
they are borrowing other people's money. In fact, when banks and building
societies make any loan, they create new money.
“Money loaned by a bank is not a loan of pre-existent
money; money loaned by a bank is additional money created. The stream of money
generated by people, businesses and governments constantly borrowing from banks
and other lending institutions is relied upon to supply the economy as a whole.
Thus the supply of money depends upon people going into debt, and the level of
debt within an economy is no more than a measure of the amount of money that
has been created…”
“It is actually not in the least surprising that
nations are chronically in debt, governments have inadequate resources, public
services are under-funded and people are beset by mortgages and
overdrafts. The reason for all this monetary scarcity and insolvency is
that the financial system used by all national economies worldwide is actually
founded upon debt.”
Furthermore, this game of musical chairs is 100%
reliant upon banks continuing to pump debt into the system…
Corporate Debt: Origin of Next Crisis
By Jim Rickards
The case for a pending financial collapse is well grounded.
Financial crises occur on a regular basis including 1987, 1994, 1998, 2000,
2007-08.
That averages out to about once every five years for the past
thirty years. There has not been a financial crisis for ten years so the world
is overdue. It’s also the case that each crisis is bigger than the one before
and requires more intervention by the central banks.
The reason has to do with the system scale. In complex dynamic
systems such as capital markets, risk is an exponential function of system
scale. Increasing market scale correlates with exponentially larger market
collapses.
In basic terms, this means a market panic far larger than the
Panic of 2008.
Today, systemic risk is more dangerous than ever because the
entire system is larger than before.
Due to central bank intervention, total global debt has
increased over $150 trillion over the past 15 years.
Too-big-to-fail banks are bigger than ever, have a larger
percentage of the total assets of the banking system and have much larger
derivatives books.
Each credit and liquidity crisis starts out differently and ends
up the same.
Each crisis begins with distress in a particular overborrowed
sector and then spreads from sector to sector until the whole world is
screaming, “I want my money back!”
First, one asset class has a surprise drop. The leveraged
investors sell the sinking asset, but soon the asset is unwanted by anyone.
Margin calls roll in. Investors then sell good assets to raise cash to meet the
margin calls. This spreads the panic to banks and dealers who were not
originally involved with the weak asset.
Soon the contagion spreads to all banks and assets, as everyone
wants their money back all at once. Banks begin to fail, panic spreads and
finally central banks step in to separate winners and losers and re-liquefy the
system for the benefit of the winners.
Typically, small investors (and some bankrupt banks) get hurt
the worst while the big banks get bailed out and live to fight another day.
That much panics have in common. What varies in financial panics
is not how they end but how they begin. The 1987 crash started with
computerized trading. The 1994 panic began in Mexico. The 1997–98 panic started
in Asian emerging markets but soon spread to Russia and the big banks. The 2000
crash began with dot-coms. The 2008 panic was triggered by defaults in subprime
mortgages.
The problem is that regulators are like generals fighting the
last war. In 2008, the global financial crisis started in the U.S. mortgage
market and spread quickly to the overleveraged banking sector.
Since then, mortgage lending standards have been tightened
considerably and bank capital requirements have been raised steeply. Banks and
mortgage lenders may be safer today, but the system is not. Risk has simply
shifted.
What will trigger the next panic?
My answer is always the same: We can be certain the crisis is
coming and can estimate its magnitude, but no one knows exactly when it will
happen or what the specific catalyst will be.
When it happens, it could unfold very quickly. There may not be
time or opportunity in the middle of the crisis to take defensive measures.
That’s why I keep reminding my readers that the time to prepare by increasing
allocations to cash and gold is now.
With that said, it is useful to consider the most likely flash
points for the next crisis and to monitor events as a way to improve one’s
chances of seeing a crisis at the early stages.
So many credit crises are brewing, it’s hard to keep track
without a scorecard. The mother of all credit crises is coming to China with
over a quarter-trillion dollars owed by insolvent banks and state-owned
enterprises, not to mention off-the-books liabilities of provincial
governments, wealth management products and developers of white elephant
infrastructure projects.
Then there’s a possible emerging-markets credit crisis, with a
parade of potentially bankrupt borrowers vulnerable to hot money capital
outflows and a slowdown of growth in developing economies.
Close on their heels is the U.S. student loan debacle, with over
$1.5 trillion in outstanding debts and default rates approaching 20%.
Now we’re facing a devastating wave of junk bond defaults. The
next financial collapse, already on our radar screen, will quite possibly come
from junk bonds.
That’s not my view alone.
Prominent economist Carmen Reinhart, for example, says the place
to watch is U.S. high-yield debt, aka “junk bonds.”
Since the great financial crisis, extremely low interest rates
allowed the total number of highly speculative corporate bonds, or “junk
bonds,” to rise about 60% — a record high.
Many businesses became extremely leveraged as a result. Estimates
put the total amount of junk bonds outstanding at about $3.7 trillion.
The danger is that when the next downturn comes, many
corporations will be unable to service their debt.
Defaults will spread throughout the system like a deadly
contagion, and the damage will be enormous.
This is from a report by Mariarosa Verde, Moody’s senior credit
officer:
This extended period of benign credit conditions has helped many
weak, highly leveraged companies to avoid default… These companies are poised
to default when credit conditions eventually become more difficult… The record
number of highly leveraged companies has set the stage for a particularly large
wave of defaults when the next period of broad economic stress eventually
arrives.
If default rates are only 10% — a conservative assumption — this
corporate debt fiasco will be at least six times larger than the subprime
losses in 2007-08.
For now, it’s not clear which way things will break next.
Volatility is back and markets are still in a precarious position.
But the stock market is ultimately going to collapse in the face
of rising credit losses and tightening credit conditions. Once the tsunami
hits, no one will be spared. When it does hit, many investors will be caught
completely unprepared.
You don’t want to be heavily exposed to these markets. It’s far
better to get out too early than too late. Once the market falls apart, it’ll
be too late to act.
That’s why now is the time to buy gold, while it’s still cheap
(even with its recent run-up).
When you need it most, once the crisis hits, it’ll cost a
fortune. Preparation means 10% percent of your investable assets in gold (and
possibly silver) and another 30% in cash.
That allocation will preserve wealth and provide dry powder for
bottom-fishing in the crisis to come.
SIDEBAR:
A
new survey from financial information
website Bankrate.com found that everyday Americans have a less favorable view
of the economy than experts do. All the experts rated the economy as being
“excellent” or “good,” compared to just 59 percent of others. And 39 percent of
everyday Americans said the economy was “not so good” or “poor.”
Bankrate
surveyed around 1,000 people and nine economic experts for the study.
The
survey also included a question about when the next recession would
begin. Approximately 40 percent of average hard working Americans felt
that a recession had either already begun or would begin very soon, but none of the
“experts” felt that way…
Everyday
Americans also said they expect a recession to hit sooner than the
experts predict. A fifth of Americans polled said they believe the recession
has already begun, and 21 percent said they expected it to begin within six
months or a year. However, all the experts said they don’t expect a recession
to begin for either one to two years or more than two years.
A
different survey has found that 71 percent of all Americans say that
they “are unprepared for another financial crisis”…
Meanwhile,
43% of Americans say they feel financially insecure and 71% are unprepared for
another financial crisis, such as going bankrupt or losing their home, a survey of 24,070
adults released
this week by market researcher YouGov found. Some 55% of those who feel
unprepared say they’re not confident that they will be able to afford
retirement; they’re more likely than those who feel financially secure to say
the government should make sure everyone has health insurance.
RELATED RESOURCES
In modern
days, economic collapse is one of the most likely disasters that people all
over the world must contend with. Even in an economic stronghold such as the
United States, the possibility of economic collapse looms large. In fact, many
experts predict that the U.S. is due for an economic downturn, the severity of
which is yet to be seen. But considering that the fundamental problems behind
the last crash were never really fixed, it will probably be pretty bad.
Aside from
the financial consequences, though, there are plenty of other scary things that
follow in the wake of an economic collapse. Below, we’ll cover some of these
frightening possibilities in order to highlight why it is so important to be
prepared.
1.
Kidnappings Increase - Countries that experience an economic collapse typically
see a spike in kidnappings as well. Kidnapping a person of wealth and demanding
a ransom is one way for desperate people to acquire money when no other means
of acquiring money are available...
Major cities
may still only take up a small portion of the land mass in the United States, but they are nevertheless home to over 80% of the population.
With this being the case, the odds of being caught in the concrete jungle when
disaster strikes are quite high.
Of course, the survival skills necessary to navigate a city during
a disaster – whether it’s a major disaster such as a foreign attack or a
personal disaster such as a robbery – are quite different from the skills many
preppers may be accustomed to.
If you would like to ensure that you can take whatever the
concrete jungle has to throw at you, here are nine skills you need to have...
For those who
are preparing for tougher times, canned foods are invaluable. Of all the food storage methods, few are
more convenient or long-lasting than canned food.
If all you’ve ever done is browse the
canned goods aisle of your supermarket, you may be surprised to learn just how
much variety there is when it comes to canned foods. There is a lot more than
just canned meat, veggies, and soups. All sorts of foods can be canned.
These canned foods probably sound
weird, but they're actually very good. If you're looking to add some variety to
your food stockpile, check these out...
Bruce, the
“Poor Man”
Additional News of Note…
How to Stop Living Paycheck to Paycheck in 8 Steps
Does it feel like your paycheck is gone
the moment you get it? Here's how to break that vicious cycle.
Plus: 3 Reasons You Need a Health Savings Account - and How to Open
One Today and 5 Ways Marriage Can Make You Wealthier
Dark Patterns: How Sneaky and Misleading Tricks
Manipulate You Into Buying
According to a new study (see full study), more than one in 10 websites checked used some type of misleading technique to prompt you to buy or sign up for something. Some of
these methods are simply outrageous. They often create a false sense of urgency
by suggesting a particular item is selling fast and if you don't act quickly,
you will lose out. [Alternate link]
75
Free Things You Can Get This Summer
"Free" is a good four letter word, and this summer,
there are plenty of things you can do
or get for free [click the small "view all" link to
see all tips on one page]. Take a factory tour, get a free ice cream cone or
magazine subscription, get free food on your birthday, get free admission to
museums, and much more. These tips come from Jeff Yeager, the "ultimate
cheapskate."
Describing what happened on
March 23, 2018, Nicky said a stream of bullets came blasting through the patio
door, narrowly missing her 15-year-old son’s head.
Nicky said: ‘With the bullets smashing through the windows I can
only describe our feeling as being hunted like wild animals.
A Final Note…
Contributors and subscribers enable the Poor Man Survivor to post 150+ free essays annually. It is for this reason they are Heroes and Heroines of New Media. Without your financial support, the free content would disappear for the simple reason that I cannot keep body and soul together on my meager book sales & ecommerce alone.
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